OBR October 2026 forecast: inflation up, growth slower, borrowing higher than in March

Key facts

Each row is checked against the stored copy of the official document; open a row to see the exact words and where they appear.

Fact	Value	Applies to	Source
The OBR forecasts consumer price inflation of 3½ per cent in 2027, compared with 2 per cent expected in March.	3½ per cent (2027)	CPI inflation	Quote and location CPI inflation is 3½ per cent in 2027, compared to 2 per cent expected in March. Source: October 2026 Economic and fiscal outlook — Economic and fiscal outlook – October 2026, PDF p.12 (printed p.9), section Overview, para 1.2 — Open the official document at page 12 (opens in a new tab) · Our archived record
Real GDP growth is forecast to slow from around 1¼ per cent in 2026 to 1 per cent in 2027.	1 per cent (2027)	Real GDP growth	Quote and location Real GDP growth slows from around 1¼ per cent in 2026 to 1 per cent in 2027 Source: October 2026 Economic and fiscal outlook — Economic and fiscal outlook – October 2026, PDF p.12 (printed p.9), section Overview, para 1.2 — Open the official document at page 12 (opens in a new tab) · Our archived record
Borrowing is forecast at 4.2 per cent of GDP (£133 billion) this year, down from £134 billion in 2025-26.	4.2 per cent of GDP (2026-27)	Public sector net borrowing	Quote and location of GDP (£134 billion) in 2025-26 to 4.2 per cent of GDP (£133 billion) this year. Source: October 2026 Economic and fiscal outlook — Economic and fiscal outlook – October 2026, PDF p.20 (printed p.17), section Fiscal outlook, para 1.18 — Open the official document at page 20 (opens in a new tab) · Our archived record
Borrowing is forecast to fall to 1.8 per cent of GDP (£67 billion) in 2030-31.	1.8 per cent of GDP (2030-31)	Public sector net borrowing	Quote and location to reach 1.8 per cent of GDP (£67 billion) in 2030-31 Source: October 2026 Economic and fiscal outlook — Economic and fiscal outlook – October 2026, PDF p.20 (printed p.17), section Fiscal outlook, para 1.18 — Open the official document at page 20 (opens in a new tab) · Our archived record
Borrowing is expected to be higher than in March in every year of the forecast, by around £18 billion this year and £16 billion in 2027-28.	18 £ billion (2026-27)	Public sector net borrowing, change since March	Quote and location higher compared to March in every year of the forecast – by around £18 billion this year, £16 billion in 2027-28, and an average of £11 billion a year thereafter. Source: October 2026 Economic and fiscal outlook — Economic and fiscal outlook – October 2026, PDF p.18 (printed p.15), section Fiscal outlook, para 1.17 — Open the official document at page 18 (opens in a new tab) · Our archived record
Public sector net debt is forecast to peak at 97 per cent of GDP in 2028-29.	97 per cent of GDP (2028-29)	Public sector net debt	Quote and location public sector net debt rises from 96 per cent of GDP in this year to peak at 97 per cent of GDP in 2028-29. Source: October 2026 Economic and fiscal outlook — Economic and fiscal outlook – October 2026, PDF p.21 (printed p.18), section Fiscal outlook, para 1.22 — Open the official document at page 21 (opens in a new tab) · Our archived record
The current budget is forecast to meet the Government's fiscal mandate in 2029-30 with a margin of £15 billion.	15 £ billion (2029-30)	Fiscal mandate (current budget in surplus)	Quote and location the Government’s fiscal mandate for the current budget to be in surplus in 2029-30 is met by a margin of £15 billion. Source: October 2026 Economic and fiscal outlook — Economic and fiscal outlook – October 2026, PDF p.22 (printed p.19), section Performance against the Government's fiscal targets, para 1.24 — Open the official document at page 22 (opens in a new tab) · Our archived record
The OBR puts the probability of meeting the fiscal mandate at 56 per cent.	56 per cent (2029-30)	Fiscal mandate	Quote and location The probability of meeting the fiscal mandate is now estimated at 56 per cent Source: October 2026 Economic and fiscal outlook — Economic and fiscal outlook – October 2026, PDF p.22 (printed p.19), section Performance against the Government's fiscal targets, para 1.24 — Open the official document at page 22 (opens in a new tab) · Our archived record
The supplementary target on net financial liabilities is forecast to be met by a margin of £24 billion.	24 £ billion (2029-30)	Public sector net financial liabilities target	Quote and location is forecast to be met by a margin of £24 billion. Source: October 2026 Economic and fiscal outlook — Economic and fiscal outlook – October 2026, PDF p.22 (printed p.19), section Performance against the Government's fiscal targets, para 1.25 — Open the official document at page 22 (opens in a new tab) · Our archived record
Spending on debt interest is forecast to rise to £160 billion (4.2 per cent of GDP) in 2031-32.	160 £ billion (2031-32)	Debt interest spending	Quote and location It is now forecast to rise to £160 billion (4.2 per cent of GDP) in 2031-32. Source: October 2026 Economic and fiscal outlook — Economic and fiscal outlook – October 2026, PDF p.24 (printed p.21), section Risks and uncertainties, para 1.28 — Open the official document at page 24 (opens in a new tab) · Our archived record
The tax-to-GDP ratio is expected to pass its historical high of 37.2 per cent in 2027-28.	37.2 per cent of GDP (2027-28)	Tax-to-GDP ratio	Quote and location The tax-to-GDP ratio is expected to surpass its historical high of 37.2 per cent in 2027-28 and to reach almost 6 per cent of GDP above the pre-pandemic level Source: October 2026 Economic and fiscal outlook — Economic and fiscal outlook – October 2026, PDF p.21 (printed p.18), section Fiscal outlook, para 1.20 — Open the official document at page 21 (opens in a new tab) · Our archived record
Per person real household disposable income in 2030-31 is forecast to be only around 2 per cent above its pre-pandemic level.	2 per cent (2030-31)	Real household disposable income per person	Quote and location in 2030-31, it is only around 2 per cent above pre-pandemic levels Source: October 2026 Economic and fiscal outlook — Economic and fiscal outlook – October 2026, PDF p.16 (printed p.13), section Economic outlook, para 1.11 — Open the official document at page 16 (opens in a new tab) · Our archived record
If energy prices peak at a higher level and stay high for longer, the OBR says this could raise borrowing by as much as £17 billion in 2027-28.	17 £ billion (2027-28)	Borrowing risk from higher energy prices (scenario)	Quote and location This could raise borrowing by as much as £17 billion in 2027-28 Source: October 2026 Economic and fiscal outlook — Economic and fiscal outlook – October 2026, PDF p.23 (printed p.20), section Risks and uncertainties, para 1.27 — Open the official document at page 23 (opens in a new tab) · Our archived record
The OBR says borrowing could be £17 billion above the central forecast in 2027-28 if energy prices reach a higher and more sustained peak.	17 £ billion (2027-28)	Borrowing risk from higher energy prices (central forecast comparison)	Quote and location borrowing could be £17 billion above the central forecast in 2027-28 Source: October 2026 Economic and fiscal outlook — Economic and fiscal outlook – October 2026, PDF p.12 (printed p.9), section Overview, para 1.4 — Open the official document at page 12 (opens in a new tab) · Our archived record
The OBR says the margins against the Government's fiscal targets are very small compared with the inherent risk and uncertainty around any medium-term forecast.	very small margin against the fiscal targets (2029-30)	Margins against the fiscal targets	Quote and location These margins against the fiscal targets are very small compared to the inherent risk and uncertainty around any medium-term fiscal forecast. Source: October 2026 Economic and fiscal outlook — Economic and fiscal outlook – October 2026, PDF p.23 (printed p.20), section Risks and uncertainties, para 1.26 — Open the official document at page 23 (opens in a new tab) · Our archived record
The OBR lists higher inflation, public sector pay and policy ambitions such as defence among the significant pressures on departmental spending.	not stated	Pressures on departmental spending	Quote and location include higher inflation, public sector pay, and policy ambitions such as defence. Source: October 2026 Economic and fiscal outlook — Economic and fiscal outlook – October 2026, PDF p.12 (printed p.9), section Overview, para 1.4 — Open the official document at page 12 (opens in a new tab) · Our archived record
The OBR says the worsening in the medium-term borrowing outlook since March is primarily due to higher debt interest costs.	not stated	Reason for higher borrowing since March	Quote and location Relative to March, there is a moderate deterioration in the medium-term fiscal outlook, primarily due to the impact of higher debt interest costs. Source: October 2026 Economic and fiscal outlook — Economic and fiscal outlook – October 2026, PDF p.18 (printed p.15), section Fiscal outlook, para 1.17 — Open the official document at page 18 (opens in a new tab) · Our archived record
The OBR says the tax-to-GDP ratio is expected to pass its historical high in 2027-28 and continue increasing in every year of the forecast.	37.2 per cent of GDP (2027-28)	Tax-to-GDP ratio	Quote and location The tax-to-GDP ratio is expected to surpass its historical high of 37.2 per cent in 2027- 28 and continue increasing in every year of the forecast. Source: October 2026 Economic and fiscal outlook — Economic and fiscal outlook – October 2026, PDF p.25 (printed p.22), section Risks and uncertainties, para 1.28 — Open the official document at page 25 (opens in a new tab) · Our archived record

The story

The Office for Budget Responsibility (OBR) is the independent body that forecasts the UK economy and public finances. Its October 2026 report says there have been further adverse developments since March, with interest rates and energy prices both rising significantly.

As a result, the OBR now expects consumer price inflation of 3½ per cent in 2027, compared with 2 per cent expected in March. Real GDP growth is forecast to slow from around 1¼ per cent in 2026 to 1 per cent in 2027. Real household disposable income per person (income after tax, adjusted for inflation) in 2030-31 is forecast to be only around 2 per cent above its pre-pandemic level.

Borrowing is forecast at 4.2 per cent of GDP (£133 billion) this year (2026-27), falling to 1.8 per cent of GDP (£67 billion) in 2030-31. It is expected to be higher than in March in every year, by around £18 billion this year and £16 billion in 2027-28. Public sector net debt is forecast to peak at 97 per cent of GDP in 2028-29. Debt interest spending is forecast to reach £160 billion in 2031-32.

The Government's fiscal mandate, for the current budget to be in surplus in 2029-30, is forecast to be met with a margin of £15 billion. The OBR puts the probability of meeting it at 56 per cent. The supplementary target on net financial liabilities is forecast to be met by £24 billion.

The tax-to-GDP ratio is expected to pass its historical high of 37.2 per cent in 2027-28. The OBR warns the outlook is uncertain: if energy prices peak higher and stay high longer, borrowing could be £17 billion above the central forecast in 2027-28.

What changed

The text says there have been further adverse developments since the March forecast, with both interest rates and energy prices rising significantly. Inflation in 2027 is now 3½ per cent against 2 per cent expected in March, and borrowing is higher than in March in every year of the forecast.

What it means

Written by AI and checked by a second AI. Published under the responsibility of VERADIQ's human director. Lens: economist

In practice, the report shows how exposed the public finances are to events the Government does not control. Energy prices and interest rates drive the changes since March, and the OBR describes the margins against the fiscal targets, including the £15 billion on the fiscal mandate, as very small compared with the risk and uncertainty around any medium-term forecast.

It matters because the cushion is small next to the risks the OBR lists. The report says that if energy prices peak higher and stay high for longer, borrowing could rise by as much as £17 billion in 2027-28. That is more than the £15 billion margin on the mandate, although the two figures relate to different years and are not a like-for-like comparison.

What to watch: whether energy prices fall as markets assumed, how wages respond to higher inflation while income tax thresholds are frozen, and whether debt interest, forecast at £160 billion in 2031-32, keeps rising.

Who is affected

Households, through higher inflation and slower income growth
Taxpayers, because the tax-to-GDP ratio is expected to pass its historical high in 2027-28 and keep increasing in every year of the forecast
Government departments, which face spending pressures

Key dates

2028-29 — Public sector net debt is forecast to peak at 97 per cent of GDP
2029-30 — The year in which the fiscal mandate for the current budget is forecast to be met, by a margin of £15 billion
2031-32 — Debt interest spending is forecast to reach £160 billion (4.2 per cent of GDP)

What the document does not say

The summary does not say whether energy prices will in fact fall back as market pricing assumed; the OBR says the outlook for the economy and public finances is uncertain and that energy markets remain volatile.
The chapter does not give a single certain outcome for borrowing: it says outcomes above and below the central forecast are likely and of broadly equal probability.
The size of the cost of the Government's planned social care reforms is not given, as it depends on final policy design and timing.
The effect of the Employment Rights Act 2025 on potential output is not quantified, because the OBR judged the size too uncertain to adjust for.

Plain-English glossary

OBR: The Office for Budget Responsibility, the independent body that forecasts the UK economy and public finances.
CPI inflation: The yearly rise in consumer prices, the standard measure of inflation.
GDP: Gross domestic product: the total value of what the economy produces.
Public sector net borrowing: How much more the public sector spends than it receives in a year, which has to be borrowed.
Public sector net debt: The total the public sector owes, after taking off its liquid assets.
Fiscal mandate: One of the Government's rules for the public finances: here, for the current budget to be in surplus in 2029-30.
Current budget: Day-to-day spending compared with receipts, leaving out investment spending.
Tax-to-GDP ratio: Total tax raised as a share of the size of the economy.
Bank Rate: The Bank of England's main interest rate.
Gilt: A UK government bond: a way the Government borrows money.
Real household disposable income: The income households have available to spend or save, adjusted for inflation so that changes reflect what money can actually buy.

How this was checked

Status: confirmed
Checked by: claude, codex (OpenAI family)
Method: quote check against stored text, digit guard, adversarial review, independent second-family review (codex CONFIRMED 28 Oct 2026 after one line-break quote was shortened), compliance review
Limits: The document is 200 pages. This digest is based on Chapter 1 Executive summary (printed pages 9 to 23) and the figures it states; the later chapters and detailed tables were not used. Locators give the PDF page and paragraph number. Forecast figures are as printed in the OBR's central forecast.
Approved for publication: 28 Oct 2026, 15:10 GMT

Not tax, legal or investment advice.

Corrections

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